UPDATE (3/20/2020): Budgets, Taxes and Coronavirus – Oh My!

This is a new experience for many homes and small businesses today as we continue to try and navigate the growing concerns of budgets, taxes and the coronavirus. But, we’ve been here before. We may not have had to deal with coronavirus before, but we have seen economic scares in the face of disease and disaster before, yet somehow this feels different.

The quarantines and closing of so many places of business and sources of entertainment has anxiety and fears on overdrive today. Minnesota has never invoked a mandated quarantine before, although we’ve had a law that addressed this as one of the measures for some time now. In fact, the bioterrorism law was written when our country went through a scare of anthrax-related attacks shortly following 911. The law was updated again in 2018 when Sen. Michelle Benson, R-Ham Lake, directed her staff to write up a memo for top legislators on the law’s origins and authority as part of the 2018 update addressing a state authority quarantines that added more conditions, including “severe acute respiratory syndromes” and “influenza that can cause a pandemic.” This law, in part, was the reason our state and local governments were able to so quickly enforce the recent mandates across Minnesota.

Although these measures are in place to protect the long-term health and wealth of our state, its businesses and residents, the immediate effect for some has been an increase in anxiety and mental-health challenges, financial worry, and even panic. While some are staying calm and going through the motions, others are racing around town trying to buy out supplies at local stores out of fear, and some, even out of greed – attempting to take advantage of others in fear of being without.

And, while retailers are seeing record sales right now, many others are seeing record drops in income and facing a loss of income altogether. What does this mean for you and your business?

We’re going to explore budgets, taxes and coronavirus (COVID-19), and how this all plays out for you now and in the coming weeks and months.

Information about COVID-19 and the measures our federal, state, and local leaders are taking to address it and its far-reaching impacts to households and businesses are changing hourly let alone daily. So, how should you prepare?

We won’t get into the health side of things in this article. We believe there are enough resources out there to provide you tips and direction on staying clean, healthy and safe like the CDC’s guide on how to protect your home from coronavirus. Instead, we’re going to talk about tips and information related to your household and business budgets.

The Treasury and IRS came out yesterday, St. Patrick’s Day (March 17th), and said it plans to delay tax payment deadlines for 90 days. What does this mean for you? At this time, April 15th is still our deadline to file taxes, however, if a taxpayer owes up to $1 Million for 2019, the federal government will defer payments for three months; interest and penalty-free. If you are filing for an extension to complete filing in October the estimated tax payment will still be due July 15th, and your extension filing is still due April 15. Corporate filers will also see similar considerations for taxes owed up to $10 Million. These changes in payment deadlines have not extended in the state of Minnesota as of this time but, again, information has been changing daily, if not from hour-to-hour. So, if you have any questions you can contact the Minnesota Department of Revenue.

UPDATE: The Treasury & IRS announced Friday, 3/20, they would extend or postpone tax filing deadline for 2019 IRS Tax Returns until July 15, 2020. This does not affect Minnesota State Filing requirements. Minnesota individual income tax returns are still due April 15, 2020. The MN DOR says they will continue to monitor the situation and will communicate any changes to Minnesota tax filing or payment deadlines on their website. See Our Response to COVID-19

Minnesota Unemployment Insurance is making temporary changes to their filing process to aid individuals facing layoffs and loss of income during this time. So what are some of those changes? One of the biggest changes is the timing of application. Previously you needed to wait at least one week after your final paycheck before you could apply. MUI is allowing applicants affected by a loss of income due to COVID-19 to apply as soon as they are dismissed. Additionally, applicants were previously required to be actively looking for new employment during the period they were receiving unemployment benefits and keeping an auditable record of that search. However, since those affected because of coronavirus cannot go back to work at this time, they are suspending this requirement as well. If you have additional questions, want to see a full explanation of updates and changes, or have a need to file a claim of unemployment at this time, you should visit https://www.uimn.org/applicants/needtoknow/news-updates/covid-19. Unemployment Insurance still does not apply to those who are self-employed or considered an independent contractor. If you have questions/concerns about assistance during an economic downturn for those in these type of industry, and there are a LOT (REALTORS®, hairdressers, marketing managers & web developers, food truck owners, Uber drivers, and independent coaches or caregivers; just to name a few), you should contact your state representative to let them know you need help.

What are investors, banks and financial advisers telling clients about tapping into those retirement funds, stock options or emergency savings accounts? The short answer is – hold off for as long as you can. It’s tempting to want to pull everything out of what looks like a sinking ship, but the fact of the matter is – we’ve been here before and the market will rebound again. If you sell everything off in a panic today to stuff that mattress you could be losing out on 10’s of thousands in retirement benefits later. HOWEVER, someone facing retirement tomorrow will be in a much different place than someone facing retirement 5, 10, 15, or 20+ years from now. Our advice? Contact your financial advisor for more information and a guided plan that fits your needs and concerns rather than taking generalized information you may be hearing elsewhere. If you don’t currently have a financial planner in your corner, then it’s important to seek out the guidance of a trusted professional as soon as you can.

Clients can also contact Carefree Bookkeeping for further guidance. Carefree Bookkeeping works with a number of trusted CPA’s, Financial Advisors, and Bankruptcy, Business, Family Planning and Elder Care Law Attorneys. Each of these resources can provide valuable information, insight and guidance during times like these. Comment below if you’re looking for any of these resources and I’ll be happy to forward you information based on your location, needs and concerns.

Easing your household and operational budgets. There are a vast number of tips we can give you, such as…

Don’t panic shop. Panic purchases will disrupt your household and operational budgets faster than anything and in the long-run, not only are you taking up valuable resources a neighbor may need, you could be putting a dent into that emergency fund you need later on and could be left with a number of items you may never use or will be able to return later.

Another tip, work with utility companies to set up payment plans now. Companies like Excel Energy, CenterPoint Energy and Minnesota Power have come out with a statement this past Monday, (March 16th), saying they have plans to support customers in financial straits due to the coronavirus outbreak.

And, small business owners who are facing an economic hardship need to stay in tune with daily updates from the White House and from our own state and local government regarding a small business relief fund. But, there several additional resources to take a look at and take advantage of if possible. Here are just a few:

Assistance from banks and credit card companies – Citi, Capital One, and Wells Fargo all came out with statements of support recently

Grants and other assistance from companies and organizations – Facebook recently launched a grant program for small businesses you can read about here.

Carefree Bookkeeping clients are encouraged to reach out to us to set up a time to review their specific accounts and budgets. We can take a dive into your P&L’s, your spending habits, and income streams to see if there are any patterns or hidden opportunities to save more right now and/or open up an emergency reserve.

For more information like this and updates as we navigate the “new normal” together, make sure to follow our News For You blog and social media resources (Facebook and LinkedIn).